As the COVID-19 virus mutates into new variants ever more determined to distribute its misery, it looks like the early part of 2021 is going to be nothing more than a carry forward of the remote working experiences most economies had to live with in 2020. Whether it was the consequence of this change or a happy coincidence, one of the more visible changes in workforce management over the past few months is the growing use of DIRECT SOURCING strategies to source flexible workforce talent.

Direct Sourcing is the use of job boards on social media to directly attract talent rather than going through indirect staffing vendors for contingent talent. According to industry watchers like SIA, 62% of enterprise organizations that use contingent workers have either implemented some form of a direct sourcing program, or plan to in the near future.

Direct Sourcing has become the bridge between Recruitment Process Outsourcing (RPO) and Managed Service Provisioning (MSP), encouraging hybrid arrangements with talent sourcing partners.  In this article we dig deeper to find out why, and what it means for talent strategies.

When the world of work was straight-forward

Professionals who’ve worked in the workforce management industry for more than a decade, began their career in a simpler age. Pretty much everyone was employed that worked for a company, and temp workers were literally that: people brought in to cover maternity or sickness, or experts required to fulfil a short term need.

As the need for more flexibility in the workforce has grown, so too has the permanence of a contingent workforce. Today, most blue chips have more than a third of their resourcing capability served by contractors and indirect workers.

From a talent strategy perspective, this simpler world led to simpler decisions around who was responsible for which bit of this process. Normally, internal HR took the lead on sourcing and managing employees, while indirectly sourced talent was the realm of the purchasing department.

The Coming together of Permanent and Flexible Workforces

There is a difference between employing someone directly, and hiring workers as contractors, or via a third-party Employer of Record. At least, that’s what laws say that seek to protect the interests of workers.

The last decade has seen a massive rise in the number of individuals hired on temporary work contracts, chiefly to increase flexibility in resourcing plans. Others would argue, indirect sourcing is also being used as a mechanism by employers to shirk their employer duties; to place duties on a third-party Employer-of-Record they don’t want to perform by themselves.

Whichever side you sit on these arguments, the fact is that businesses in today’s world need to be ever more agile, and a big part of that agility comes from being able to resource up and down—both in terms of the numbers of workers, but also in their capabilities.

Employers face a delicate balancing act: they see the importance of treating individuals differently based on their contractual relationships but, at the same time, they are pressured to deploy policies, procedures—and sometimes processes and systems—consistently.

Diversity and equality are two examples of this. Data privacy and security are other examples. Companies want to be seen to be treating individuals fairly, regardless of the nature of their contract. That said, they need to do this while not falling foul of dual employment laws that seek to penalize employers that treat hired help as employees, without the perks of full-time employment.

The influence of Direct Sourcing

Amid this heady mix of “how’s and why’s” Direct Sourcing has injecting an interesting conundrum. WHAT IF you could hire temporary and contingent workers in the same way as you do permanent employees, by leveraging your own job boards projected to potentially thousands of willing candidates through the foghorn of social media? But, rather than employ these individuals directly as employees, how about working with a willing Employer-of-Record partner to sponsor and support those activities.

These hybrid partnering relationships are suddenly becoming all the rage, creating new types of relationships that the workforce management industry doesn’t really have a term for.

Confused Sourcing Arrangements

Like in any industry, outsourcing partners come in many forms. The two most common forms in the talent industry are Recruitment Process Outsourcers (RPOs) that specialize in outsourcing the permanent workforce recruitment function, and Managed Service Providers (MSPs) that act as an intermediary between large employers and their community of indirect staffing vendors.

While many of the skills and capabilities of RPOs and MSPs are the same, it used to be that large employers would employ both. One reason for this was that HR wanted to outsource non-core administrative and recruitment activities—therefore making the case to hire an RPO—while purchasing leaders recognised how much time and cost was going into indirect staffing—then making the case to hire an MSP.

The net result of these strategies are companies today employing both RPOs and MSPs, brushing under the carpet the unavoidable fact that sourcing and managing talent isn’t SO different, irrespective of the contract relationship.

Hiring an RPO and MSP encourages the duplication of technologies, processes, resources, etc. It creates wastage, often hidden under the ‘cost of doing business’ label found in administrative budgets. The reality is that one partner should, and probably could, be able to perform both RPO and MSP roles were a TOTAL TALENT MANAGEMENT approach adopted.

Direct Sourcing is Raising New Questions

The opportunity highlighted by the role of direct sourcing to serve both employment and contingent contract structures, exposes more than ever the need to consolidate talent approaches into a joined-up strategy.

Using social media to promote work opportunities—be it a task, a project, a short-term skills requirement, or a permanent role—bridges the divide that exists in talent sourcing today. Executives, less connected with the talent discipline are scratching their heads and asking the obvious question:

If we plan to use the same tech ecosystem to manage our job boards and social sites to source both job vacancies and gigging opportunities, why do we have two or more partners fulfilling these services?

ABOUT WORKSPEND

Workspend is a woman-led, diversity MSP with a global footprint that helps organizations to source, manage and nurture a flexible workforce as part of their total talent agendas.  We drive value from your contingent workforce; managing your hires and controlling the spend.  Our clients benefit from partnering with an MSP focused on outcomes and continuous year-on-year improvement that is also a diverse supplier.  Our innovations in technology, processes and compliance governance serve to bring our clients a competitive advantage.  To find out more about the benefits of using a Diverse MSP, find out here.

ABOUT THE AUTHOR

Ian Tomlin is a management consultant and writer on the subject of enterprise computing and organizational design.  He serves on the Workspend Management Team.  Ian has written several books on the subject of digital transformation, cloud computing, social operating systems, codeless applications development, business intelligence, data science, office security, customer data platforms, vendor management systems, Managed Service Provisioning (MSP), customer experience, and organizational design.  He can be reached via LinkedIn or Twitter.

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